Dime Community Bancshares Inc NY

Previous wording

Dime Community Bancshares, Inc., a New York corporation, is a bank holding company formed in 1988. On a parent-only basis, the Holding Company has minimal operations, other than as owner of Dime Community Bank. The Holding Company is dependent on dividends from its wholly-owned subsidiary, Dime Community Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank's results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit and loan accounts, merchant credit and debit card processing programs, loan swap fees, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans. The level of non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from the Bank’s title insurance subsidiary, and income tax expense, further affects our net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity.

Current wording

Dime Community Bancshares, Inc., a New York corporation, is a bank holding company formed in 1988. On a parent-only basis, the Holding Company has minimal operations, other than as owner of Dime Community Bank. The Holding Company is dependent on dividends from its wholly-owned subsidiary, Dime Community Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank's results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit and loan accounts, merchant credit and debit card processing programs, loan swap fees, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans and other assets. The level of non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from the Bank’s title insurance subsidiary, and income tax expense, further affects our net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity.

Previous wording

Critical accounting estimates are those estimates made in accordance with Generally Accepted Accounting Principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or the results of the operations of the Registrant. Note 1 Summary of Significant Accounting Policies (page 51), to the Company’s Audited Consolidated Financial Statement for the year ended December 31, 2023 contains a summary of significant accounting policies. These accounting policies may require various levels of subjectivity, estimates or judgment by management. Policies with respect to the methodologies it uses to determine the allowance for credit losses on loans held for investment and fair value of loans acquired in a business combinations are critical accounting policies because they are important to the presentation of the Company’s consolidated financial condition and results of operations. These critical accounting estimates involve a significant degree of complexity and require management to make difficult and subjective judgments which often necessitate assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions or estimates could result in material variations in the Company’s consolidated results of operations or financial condition.

Current wording

Critical accounting estimates are those estimates made in accordance with Generally Accepted Accounting Principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or the results of the operations of the Registrant. Note 1 Summary of Significant Accounting Policies (page 53), to the Company’s Audited Consolidated Financial Statement for the year ended December 31, 2024 contains a summary of significant accounting policies. These critical accounting estimates involve a significant degree of complexity and require management to make difficult and subjective judgments which often necessitate assumptions or estimates about highly uncertain matters. Policies with respect to the methodologies used to determine the allowance for credit losses on loans held for investment are important to the presentation of the Company’s consolidated financial condition and results of operations. The use of different judgments, assumptions or estimates could result in material variations in the Company’s consolidated results of operations or financial condition.

Previous wording

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In determining the allowance for credit losses for loans that share similar risk characteristics, the Company utilizes a model which compares the amortized cost basis of the loan to the net present value of expected cash flows to be collected. Expected credit losses are determined by aggregating the individual cash flows and calculating a loss percentage by loan segment, or pool, for loans that share similar risk characteristics. For a loan that does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods. Management assesses the sensitivity of key assumptions at least annually by stressing the assumptions to understand the impact on the model. At June 30, 2023, if the four-quarter national unemployment rate forecast had increased 100 basis points our quantitative ACL reserve would have increased 10.5%. Changes in quantitative inputs may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs may offset improvement in others. This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key input. This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.

Current wording

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In determining the allowance for credit losses for loans that share similar risk characteristics, the Company utilizes a model which compares the amortized cost basis of the loan to the net present value of expected cash flows to be collected. Expected credit losses are determined by aggregating the individual cash flows and calculating a loss percentage by loan segment, or pool, for loans that share similar risk characteristics. For a loan that does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods.

Previous wording

Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of a peer group of banks that operate in and around Dime’s footprint. These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables. Adjustments to the quantitative results are made using qualitative factors, which are subjective and require significant management judgment. These factors include: (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due loans; (6) the quality of our loan review system; (7) the value of underlying collateral for collateralized loans; (8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (9) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

Current wording

Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of a peer group of banks that operate in and around Dime’s footprint. These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables. Adjustments to the quantitative results are made using qualitative factors, which are subjective and require significant management judgment. These factors include: (1) lending policies and procedures and the experience, ability, and depth of the lending management and other relevant staff; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the volume and severity of past due loans; (5) the quality of our loan review system; (6) the value of underlying collateral for collateralized loans; (7) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (8) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

Previous wording

If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance. Future additions or reductions to the allowance may be necessary based on changes in economic, market or other conditions. Changes in estimates could result in a material change in the allowance through charges to earnings and would materially decrease our net income.

Current wording

If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance. Future additions or reductions to the allowance may be necessary

Previous wording

General. Net income was $96.1 million in 2023, compared to $152.6 million in 2022, and $104.0 million in 2021. During 2023, net interest income decreased by $63.3 million, non-interest expense increased by $12.4 million and non-interest income decreased by $2.0 million, partially offset by a decrease of $18.6 million in income tax expense and a decrease of $2.6 million in provision for credit losses. During 2022, net interest income increased by $22.3 million, provision for credit losses decreased by $0.8 million, and non-interest expense decreased by $44.6 million, partially offset by a non-interest income decrease of $3.9 million and an income tax expense increase of $15.2 million. During 2021, net interest income increased by $179.9 million, provision for credit losses decreased by $20.0 million and non-interest income increased $20.8 million, partially offset by a non-interest expense increase of $127.5 million and an income tax expense increase of $31.5 million.

Current wording

General. Net income was $29.1 million in 2024, compared to $96.1 million in 2023, and $152.6 million in 2022. During 2024, non-interest income decreased by $40.2 million, provision for credit losses increased by $33.3 million and non-interest expense increased by $13.4 million, partially offset by an increase in net interest income of $1.5 million and a decrease in income tax expense of $18.4 million. During 2023, net interest income decreased by $63.3 million, non-interest expense increased by $12.4 million and non-interest income decreased by $2.0 million, partially offset by a decrease of $18.6 million in income tax expense and a decrease of $2.6 million in provision for credit losses. During 2022, net interest income increased by $22.3 million, provision for credit losses decreased by $839 thousand, and non-interest expense decreased by $44.6 million, partially offset by a non-interest income decrease of $3.9 million and an income tax expense increase of $15.2 million.

Previous wording

The discussion of net interest income for the years ended December 31, 2023, 2022, and 2021 should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of operations for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated. The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented. Average balances were derived from average daily balances. No tax-equivalent adjustments have been made for interest income exempt from Federal, state, and local taxation. The yields include loan fees consisting of amortization of loan origination and commitment fees and certain direct and indirect origination costs, prepayment fees, and late charges that are considered adjustments to yields. Loan fees included in interest income were $1.5 million in 2023, $3.1 million in 2022, and $12.5 million in 2021. The decrease in loan fees in 2023 was primarily due to a decline in loan prepayment fees. There are no out-of-period adjustments included in the rate/volume analysis in the following table.

Current wording

The discussion of net interest income for the years ended December 31, 2024, 2023, and 2022 should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of operations for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated. The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented. Average balances were derived from average daily balances. No tax-equivalent adjustments have been made for interest income exempt from Federal, state, and local taxation. The yields include loan fees consisting of amortization of loan origination and commitment fees and certain direct and indirect origination costs, prepayment fees, and late charges that are considered adjustments to yields. Loan fees included in interest income were $1.0 million in 2024, $1.5 million in 2023, and $3.1 million in 2022. The decrease in loan fees in 2024 was primarily due to a decline in loan prepayment fees. There are no out-of-period adjustments included in the rate/volume analysis in the following table.

Previous wording

*Net Interest Income.*Net interest income was $316.6 million in 2023, $379.9 million in 2022, and $357.6 million in 2021. Average interest-earning assets were $12.85 billion in 2023, $11.68 billion in 2022 and $11.35 billion in 2021. Net interest margin was 2.46% in 2023, 3.25% in 2022, and 3.15% in 2021.

Current wording

*Net Interest Income.*Net interest income was $318.1 million in 2024, $316.6 million in 2023, and $379.9 million in 2022. Average interest-earning assets were $12.84 billion in 2024, $12.85 billion in 2023 and $11.68 billion in 2022. Net interest margin was 2.48% in 2024, 2.46% in 2023, and 3.25% in 2022.

Previous wording

Interest Income. Interest income was $609.4 million in 2023, $439.2 million in 2022, and $384.6 million in 2021. During 2023, interest income increased $170.2 million from 2022, primarily reflecting increases in interest income of $119.0 million on real estate loans, $29.1 million on C&I loans and $19.3 million on short-term investments. The increased interest income on real estate loans was primarily due to an 85-basis point increase in yield and an increase of $909.3 million in the average balances of such loans in the period. The increased interest income on C&I loans was primarily due to a 218-basis point increase in yield and an increase of $112.4 million in the average balances of such loans in the period. The increased interest income from short-term investments was primarily due to a 376-basis point increase in yield and an increase of $193.8 million in the average balances of such short-term investments in the period. Increased yields across interest-earning assets were a result of the rising interest rate environment. During 2022, interest income increased $54.6 million from 2021, primarily reflecting increases in interest income of $55.7 million on real estate loans and $6.6 million on securities. The increased interest income on real estate loans was primarily due to an increase of $829.5 million in the average balance of real estate loans and a 28-basis point increase in the yield of such loans. The increased interest income from securities was primarily due to an increase of $392.4 million in the average balance of securities, offset by a 2-basis point decrease in the yield of such securities.

Current wording

Interest Income. Interest income was $650.1 million in 2024, $609.4 million in 2023, and $439.2 million in 2022. During 2024, interest income increased $40.7 million from 2023, primarily reflecting increases in interest income of $28.1 million on business loans, $6.7 million on one-to-four family loans, $5.7 million on non-owner-occupied CRE loans, $3.4 million on other short-term investments, $1.5 million on multifamily loans, and $1.4 million in securities. The increased interest income on business loans was primarily due to an increase of $254.5 million in the average balances of business loans and a 45-basis point increase in yield of such loans in the period. The increased interest income on one-to-four family loans was primarily due to a 45-basis point increase in the yield of one-to four family loans and an increase of $62.4 million in the average balances of such loans in the period. The increased interest income on non-owner-occupied CRE loans was primarily due to a 22-basis point increase in yield of non-owner-occupied CRE loans, offset by a decrease of $30.5 million in the average balances of such loans in the period. The increased interest income from short-term investments was primarily due to an increase of $57.1 million in the average balances of short-term investments and a 9-basis point increase in yield of such investments in the period. The increased interest income on multifamily loans was primarily due to a 23-basis point increase in yield of multifamily loans, offset by a decrease of $168.9 million in the average balances of such loans in the period. The increased interest income on securities was primarily due to a 25-basis point increase in yield of securities, offset by a decrease of $124.1 million in the average balances of such securities in the period. During 2023, interest income increased $170.2 million from 2022, primarily reflecting increases in interest income of $48.2 million on business loans, $45.8 million on non-owner occupied CRE loans, $40.7 million on multifamily loans and $19.3 million on short-term investments. The increased interest income on business loans was primarily due to an increase of $240.2 million in the average balances of business loans and a 162-basis point increase in the yield of such loans. The increased interest income on non-owner occupied CRE loans was primarily due to an increase of $282.0 million in the average balances of non-owner occupied CRE loans and a 102-basis point increase in the yield of such loans. The increased interest income on multifamily loans was primarily due to an increase of $420.4 million in the average balances of multifamily loans and a 60-basis point increase in the yield of such loans. The increased interest income from short-term investments was primarily due to an increase of $193.8 million in the average balances of short-term investments and a 376-basis point increase in the yield of such investments.

Previous wording

in the average balances of such deposits in the period. The increase in interest expense on savings accounts was primarily due to a 229-basis point increase in rates paid on savings accounts and an increase of $496.1 million in the average balances of such deposits in the period. The increase in interest expense on CDs was primarily due to a 277-basis point increase in rates paid on CDs and an increase of $517.7 million in the average balances of such deposits in the period. The increase in interest expense on FHLBNY advances primarily reflects a $999.0 million increase in the average balance of FHLBNY advances and a 169-basis point increase in rates paid on such advances. During 2022, interest expense increased $32.3 million from 2021, primarily reflecting increases in interest expense of $15.2 million on savings accounts, $5.1 million on FHLBNY advances, and $4.4 million on money market accounts. The increase in interest expense on savings accounts was primarily due to an 82-basis point increase in yield on savings account and an increase of $673.1 million in the average balances of such deposits in the period. The increase in interest expense on FHLBNY advances was primarily due to a 203-basis point increase in rates paid on FHLBNY wholesale borrowings, partially offset by a $6.4 million decrease in the average balance of such borrowings. The increase in interest expense on money market accounts was primarily due to an 18-basis point increase in rates paid on money market accounts, partially offset by a $520.6 million decrease in the average balance of such accounts.

Current wording

Interest Expense. Interest expense was $332.1 million in 2024, $292.8 million in 2023, and $59.4 million in 2022. During 2024, interest expense increased $39.3 million from 2023, primarily reflecting increases in interest expense of $50.4 million on money market accounts, $7.0 million on savings accounts, $4.4 million on CDs, $3.9 million on interest-bearing checking accounts and $3.6 million on subordinated debt. The increase in interest expense on money market accounts primarily reflects a $767.4 million increase in the average balances of money market accounts and a 77-basis point increase in rates paid on such deposits in the period. The increase in interest expense on savings accounts was primarily due to a 52-basis point increase in rates paid on saving accounts, offset by a decrease of $133.9 million in the average balances of such deposits in the period. The increase in interest expense on CDs was primarily due to a 58-basis point increase in rates paid on CDs, offset by a decrease of $93.1 million in the average balances of such deposits in the period. The increase in interest expense on interest-bearing checking accounts was primarily due to a 60-basis point increase in rates paid on interest-bearing checking accounts, offset by a decrease of $44.2 million in the average balances of such deposits in the period. The increase in interest expense on subordinated debt primarily reflects a $36.5 million increase in the average balances of subordinated debt and a 71-basis point increase in rates paid on such debt. During 2023, interest expense increased $233.4 million from 2022, primarily reflecting increases in interest expense of $73.1 million on money market accounts, $57.4 million on savings accounts, $49.1 million on FHLBNY advances and $44.7 million on CDs. The increase in interest expense on money market accounts was primarily due to a 254-basis point increase in rates paid on money market accounts, offset by a decrease of $88.5 million in the average balances of such deposits in the period. The increase in interest expense on savings accounts was primarily due to a 229-basis point increase in rates paid on savings accounts and an increase of $496.1 million in the average balances of such deposits in the period. The increase in interest expense on CDs was primarily due to a 277-basis point increase in rates paid on CDs and an increase of $517.7 million in the average balances of such deposits in the period.

Previous wording

Provision for Credit Losses. The Company recognized a provision for credit losses of $2.8 million in 2023, $5.4 million in 2022 and $6.2 million in 2021. The $2.8 million provision for credit losses recognized in 2023 was associated with increased provisioning for individually analyzed loans. The $5.4 million provision for credit losses recognized in 2022 was associated with growth in the loan portfolio and a deterioration of forecasted macroeconomic conditions, offset by a reduction in reserves on individually analyzed loans and unfunded commitments. The $6.2 million provision for credit losses recognized in 2021 included a provision recorded on acquired non-PCD loans for the Day 2 accounting of acquired loans from the Merger, offset by improvements in forecasted macroeconomic conditions, and releases of reserves on individually analyzed loans. The provision for credit losses recognized in 2023, 2022 and 2021 was calculated in accordance with the CECL Standard adopted by the Company on January 1, 2021.

Current wording

Provision for Credit Losses. The Company recognized a provision for credit losses of $36.1 million in 2024, $2.8 million in 2023 and $5.4 million in 2022. The $36.1 million provision for credit losses recognized in 2024 was related to additional provisioning for the pooled multifamily, C&I, and criticized loan portfolios. The $2.8 million provision for credit losses recognized in 2023 was associated with increased provisioning for individually analyzed loans. The $5.4 million provision for credit losses recognized in 2022 was associated with growth in the loan portfolio and a deterioration of forecasted macroeconomic conditions, offset by a reduction in reserves on individually analyzed loans and unfunded commitments.

Previous wording

Non-Interest Income. ** **Non-interest income was $36.2 million in 2023, $38.2 million in 2022, and $42.1 million in 2021. During 2023, non-interest income decreased $2.0 million from 2022, primarily due to a decrease of $2.9 million from net gain on sale of securities and other assets, offset by a $3.4 million increase in loan level derivative income. During 2022, non-interest income decreased $3.9 million from 2021, due primarily to a decrease in gain on the sales of SBA PPP loans, and a decrease in gain on sale of residential loans and other non-interest income of $1.3 million each. Offsetting these declines was an increase in BOLI income of $3.3 million and no loss on termination of derivatives in 2022 (versus a $16.5 million loss on termination of derivatives in 2021).

Current wording

Non-Interest Income. ** **Non-interest income was a loss of $4.0 million in 2024, compared to income of $36.2 million in 2023, and income of $38.2 million in 2022. During 2024, non-interest income decreased $40.2 million from 2023, primarily due to a increase of $41.4 million from net loss on sale of securities as a result of a securities portfolio restructuring in 2024 and a decrease of $5.0 million in loan level derivative income, partially offset by an increase of $7.2 million from a gain on sale of other assets. During 2023, non-interest income decreased $2.0 million from 2022, due primarily to a decrease of $2.9 million from net gain on sale of securities and other assets, partially offset by a $3.4 million increase in loan level derivative income.

Previous wording

Non-Interest Expense. Non-interest expense was $213.1 million in 2023, $200.7 million in 2022, and $245.3 million in 2021. During 2023, non-interest expense increased $12.4 million from 2022, primarily due to a $6.9 million increase in severance expense, a $5.0 million increase in federal deposit insurance premiums (including $1.0 million of pre-tax expense related to the FDIC special assessment for the recovery of losses related to the closures of Silicon Valley Bank and Signature Bank), partially offset by a $2.7 million decrease in salaries and employee benefits. During 2022, non-interest expense decreased $44.6 million from 2021, primarily due to not recognizing any merger expenses and transaction costs and branch restructuring costs in 2022 (versus $44.8 million in merger expenses and transaction costs and $5.1 million of branch restructuring costs in 2021). These declines were offset by an increase of $11.8 million in salaries and employee benefits expenses.

Current wording

Non-Interest Expense. Non-interest expense was $226.5 million in 2024, $213.1 million in 2023, and $200.7 million in 2022. During 2024, non-interest expense increased $13.4 million from 2023, primarily due to a $18.7 million increase in salaries and employee benefits as the Bank continued to add business teams and a $2.5 million increase in professional services, partially offset by a $7.8 million decrease in severance expense. In addition, during 2024, the Company recorded a $1.2 million loss from a pension settlement. During 2023, non-interest expense increased $12.4 million from 2022, primarily due to a $6.9 million increase in severance expense, a $5.0 million increase in federal deposit insurance premiums (including $1.0 million of pre-tax expense related to the FDIC special assessment for the recovery of losses related to the closures of Silicon Valley Bank and Signature Bank), partially offset by a $2.7 million decrease in salaries and employee benefits.

Previous wording

Non-interest expense was 1.56%, 1.61%, and 2.03% of average assets during 2023, 2022, and 2021, respectively.

Current wording

Non-interest expense was 1.66%, 1.56%, and 1.61% of average assets during 2024, 2023, and 2022, respectively.

Previous wording

Income Tax Expense. Income tax expense was $40.8 million in 2023, $59.4 million in 2022, and $44.2 million in 2021. Income tax expense decreased $18.6 million during 2023 compared to 2022, primarily as a result of $75.0 million of lower pre-tax income during 2023. Income tax expense increased $15.2 million during 2022 compared to 2021, primarily as a result of $63.7 million of higher pre-tax income during 2022.

Current wording

Income Tax Expense. Income tax expense was $22.4 million in 2024, $40.8 million in 2023, and $59.4 million in 2022. Income tax expense decreased $18.4 million during 2024 compared to 2023, primarily as a result of $85.4 million of lower pre-tax income during 2024. Income tax expense during 2024 included $9.1 million of expense related to the taxable gain and Modified Endowment Contract (“MEC”) Tax on the surrender of legacy BOLI assets. Income tax expense decreased $18.6 million during 2023 compared to 2022, primarily as a result of $75.0 million of lower pre-tax income during 2023.

Previous wording

The Company’s consolidated tax rate was 29.8%, 28.0% and 29.8% in 2023, 2022, and 2021, respectively.

Current wording

The Company’s consolidated tax rate was 43.5%, 29.8% and 28.0% in 2024, 2023, and 2022, respectively.

Previous wording

*Assets.*Assets totaled $13.64 billion at December 31, 2023, $446.1 million above their level at December 31, 2022, primarily due to an increase in cash and due from banks of $288.3 million, an increase in the loan portfolio of $218.4

Current wording

*Assets.*Assets totaled $14.35 billion at December 31, 2024, $717.3 million above their level at December 31, 2023, primarily due to an increase in cash and due from banks of $826.0 million, an increase in the loan portfolio of $81.5 million and an increase in other assets of $62.8 million, partially offset by a decrease in total securities of $152.8 million, a decrease in BOLI of $59.2 million and a decrease in restricted stock of $29.6 million.

Previous wording

Total net loans held for investment increased $218.4 million during the year ended December 31, 2023, to $10.70 billion at period end. During the period, the Bank had originations of $997.8 million.

Current wording

Total net loans held for investment increased $81.5 million during the year ended December 31, 2024, to $10.78 billion at period end. During the period, the Bank had originations of $570.9 million.

Previous wording

Total securities decreased $55.5 million during the year ended December 31, 2023, to $1.48 billion at period end, primarily due to proceeds from principal payments, calls, maturities and sales of $177.8 million offset in part by purchases of $114.4 million and a decrease in unrealized losses of $11.8 million. There were no transfers to or from securities held-to-maturity for the year ended ended December 31, 2023.

Current wording

Total securities decreased $152.8 million during the year ended December 31, 2024, to $1.32 billion at period end, primarily due to proceeds from principal payments, calls, maturities and sales of $621.6 million offset in part by purchases of $402.8 million and a decrease in unrealized losses of $66.0 million. There were no transfers to or from securities held-to-maturity for the year ended December 31, 2024 or 2023.

Previous wording

*Stockholders’ Equity.*Stockholders’ equity increased $56.6 million during the year ended December 31, 2023 to $1.23 billion at period end, primarily due to net income for the period of $96.1 million, a decrease in accumulated other comprehensive loss of $2.8 million, offset in part by common stock dividends of $38.6 million, preferred stock dividends of $7.3 million and repurchases of shares of common stock of $947 thousand.

Current wording

*Stockholders’ Equity.*Stockholders’ equity increased $170.3 million during the year ended December 31, 2024, to $1.40 billion at period end, primarily due to $135.8 million in net proceeds raised in connection with a common equity offering, net income for the period of $29.1 million and a decrease in accumulated other comprehensive loss of $46.6 million, offset in part by common stock dividends of $40.3 million and preferred stock dividends of $7.3 million.

Previous wording

In the event that the Bank were to sell loans in the secondary market or through securitization, it generally retains servicing rights on the loans sold. Servicing fees are typically derived based upon the difference between the actual origination rate and contractual pass-through rate of the loans at the time of sale. At December 31, 2023 and 2022, the Bank had recorded servicing right assets ("SRAs") of $2.9 million and $3.1 million, respectively, associated with the sale of loans to third-party institutions in which the Bank retained the servicing of the loan. The Bank outsources the servicing of a portion of our one-to-four family mortgage loan portfolio to an unrelated third-party under a sub-servicing agreement. Fees paid under the sub-servicing agreement are reported as a component of other non-interest expense in the consolidated statements of operations.

Current wording

In the event that the Bank sells loans in the secondary market or through securitization, it generally retains servicing rights on the loans sold. Servicing fees are typically derived based upon the difference between the actual origination rate and contractual pass-through rate of the loans at the time of sale. At December 31, 2024 and 2023, the Bank had recorded servicing right assets ("SRAs") of $2.4 million and $2.9 million, respectively, associated with the sale of loans to third-party institutions in which the Bank retained the servicing of the loan. The Bank outsources the servicing of a portion of our one-to-four family mortgage loan portfolio to an unrelated third-party under a sub-servicing agreement. Fees paid under the sub-servicing agreement are reported as a component of other non-interest expense in the consolidated statements of operations.

Previous wording

The following table distributes our loans held for investment portfolio at December 31, 2023 by the earlier of the maturity or next repricing date. ARMs are included in the period during which their interest rates are next scheduled to adjust. The table does not include scheduled principal amortization.

Current wording

The following table presents the portfolio of fixed and adjustable rate loans (“ARMs”) by the earlier of the maturity or next reprice date as of December 31, 2024. ARMs have repricing frequencies of greater than or equal to one year and are included in the period during which their interest rates are next scheduled to adjust or mature. The table does not include scheduled principal amortization.

Previous wording

We do not originate or purchase loans, either whole loans or loans underlying mortgage-backed securities (“MBS”), which would have been considered subprime loans at origination,i.e., real estate loans advanced to borrowers who did not qualify for market interest rates because of problems with their income or credit history. See Note 4 to our Consolidated Financial Statements for a discussion of evaluation for impaired securities.

Current wording

We do not originate or purchase loans, either whole loans or loans underlying mortgage-backed securities (“MBS”), which would have been considered subprime loans at origination,i.e., real estate loans advanced to borrowers who did not qualify for market interest rates because of problems with their income or credit history. See Note 3 of our Consolidated Financial Statements for a discussion of evaluation for impaired securities.

Previous wording

Our loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of multifamily residential, CRE loans, and C&I loans, or fifteen days late in connection with one-to-four family and consumer loans. Thereafter, periodic letters are mailed and phone calls are placed to the borrower until payment is received. When contact is made with the borrower at any time prior to foreclosure, we will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.

Current wording

Our loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of business loans, multifamily residential and mixed use, non-owner-occupied commercial real estate loans, and ADC loans, or fifteen days late in connection with one-to-four family and consumer loans. Thereafter, periodic letters are mailed and phone calls are placed to the borrower until payment is received or the loan is transferred to workout. When contact is made with the borrower at any time prior to foreclosure, we will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.

Previous wording

Accrual of interest is generally discontinued on a loan that meets any of the following three criteria: (i) full payment of principal or interest is not expected; (ii) principal or interest has been in default for a period of 90 days or more (unless the loan is both deemed to be well secured and in the process of collection); or (iii) an election has otherwise been made to maintain the loan on a cash basis due to deterioration in the financial condition of the borrower. Such non-accrual

Current wording

Accrual of interest is generally discontinued on a loan that meets any of the following three criteria: (i) full payment of principal or interest is not expected; (ii) principal or interest has been in default for a period of 90 days or more (unless the loan is both deemed to be well secured and in the process of collection); or (iii) an election has otherwise been made to maintain the loan on a cash basis due to deterioration in the financial condition of the borrower. Such non-accrual determination practices are applied consistently to all loans regardless of their internal classification or designation. Upon entering non-accrual status, the system will reverse all outstanding accrued interest receivable.

Previous wording

We generally initiate foreclosure proceedings on real estate loans when a loan enters non-accrual status based upon non-payment, unless the borrower is paying in accordance with an agreed upon modified payment agreement. We obtain an updated appraisal upon the commencement of legal action to calculate a potential collateral shortfall and to reserve appropriately for the potential loss. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to Other Real Estate Owned (“OREO”) status. We generally attempt to utilize all available remedies, such as note sales in lieu of foreclosure, in an effort to resolve non-accrual loans and OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances. We have not initiated any expected or imminent foreclosure proceedings that are likely to have a material adverse impact on our consolidated financial statements. In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and has made at least six months of payments.

Current wording

updated appraisal upon the commencement of legal action to calculate a potential collateral shortfall and to reserve appropriately for the potential loss. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to Other Real Estate Owned (“OREO”) status. We generally attempt to utilize all available remedies, such as note sales in lieu of foreclosure, in an effort to resolve non-accrual loans and OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances. We have not initiated any expected or imminent foreclosure proceedings that are likely to have a material adverse impact on our consolidated financial statements. In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and has made at least six months of payments.

Previous wording

The C&I portfolio is actively managed by our lenders and underwriters. Most credit facilities typically require an annual review of the exposure and borrowers are required to submit annual financial reporting and loans are structured with financial covenants to indicate expected performance levels. Smaller C&I loans are monitored based on performance and the ability to draw against a credit line is curtailed if there are any indications of credit deterioration. Guarantors are also required to update their financial reporting. All exposures are risk rated and those entering adverse ratings due to financial performance concerns of the borrower or material delinquency of any payments or financial reporting are subjected to added management scrutiny. Measures taken typically include amendments to the amount of the available credit facility, requirements for increased collateral, additional guarantor support or a material enhancement to the frequency and quality of financial reporting. Loans determined to reach adverse risk rating standards are monitored closely by Credit Administration to identify any potential credit losses. When warranted, loans reaching a Substandard rating could be reassigned to the Workout Group for direct handling.

Current wording

The C&I portfolio, which is within our business loans, is actively managed by our lenders. Most credit facilities typically require an annual review of the exposure and borrowers are required to submit annual financial reporting and loans are structured with financial covenants to indicate expected performance levels. Smaller C&I loans are monitored based on performance and the ability to draw against a credit line is curtailed if there are any indications of credit deterioration. Guarantors are also required to update their financial reporting on an annual basis or alternative schedule as provided in their loan documents. All exposures are credit risk rated and those entering adverse ratings due to financial performance concerns of the borrower or material delinquency of any payments or financial reporting are subjected to added management scrutiny and monitoring. Measures taken typically include amendments to the amount of the available credit facility, requirements for increased collateral, additional guarantor support or a material enhancement to the frequency and quality of financial reporting. Loans determined to reach adverse risk rating standards are monitored closely by Credit Administration to identify any potential credit losses. When warranted, loans reaching a Substandard rating could be reassigned to the Workout Group for direct handling.

Previous wording

Within our held-for-investment loan portfolio, non-accrual loans totaled $29.1 million at December 31, 2023 and $34.2 million at December 31, 2022.

Current wording

Within our held-for-investment loan portfolio, non-accrual loans totaled $49.5 million at December 31, 2024 and $29.1 million at December 31, 2023.

Previous wording

The Company adopted ASU No. 2022-02 on January 1, 2023, which eliminates the recognition and measurement of a TDR. Due to the removal of the TDR designation, the Company applies the loan refinancing and restructuring guidance to determine whether a modification or other forms of restructuring result in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combinations of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.

Current wording

The Company applies the loan refinancing and restructuring guidance to determine whether a modification or other forms of restructuring result in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows, include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combination of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.

Previous wording

Please refer to Note 5 to our condensed Consolidated Financial Statements for a further discussion loan restructurings.

Current wording

Please refer to Note 4 of our condensed Consolidated Financial Statements for further discussion on loan restructurings.

Previous wording

At December 31, 2023, we had loans totaling $12.0 million that were past due between 30 and 59 days. At December 31, 2022, we had loans totaling $23.5 million that were past due between 30 and 59 days. The 30 to 59-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.

Current wording

At December 31, 2024, we had loans totaling $10.3 million that were past due between 30 and 59 days, compared to $12.0 million at December 31, 2023. The 30 to 59-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.

Previous wording

At December 31, 2023, we had loans totaling $1.3 million that were past due between 60 and 89 days. At December 31, 2022, we had loans totaling $0.7 million that were past due between 60 and 89 days. The 60 to 89-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.

Current wording

At December 31, 2024, we had loans totaling $31.3 million that were past due between 60 and 89 days, compared to $1.3 million at December 31, 2023. The 60 to 89-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.

Previous wording

We maintain a reserve, recorded in other liabilities, associated with unfunded loan commitments accepted by the borrower. The amount of reserve was $2.7 million at December 31, 2023 and $2.8 million at December 31, 2022. This reserve is determined based upon the outstanding volume of loan commitments at each period end. Any increases or reductions in this reserve are recognized in provision for credit losses.

Current wording

We maintain a reserve, recorded in other liabilities, associated with unfunded loan commitments accepted by the borrower. The amount of reserve was $2.7 million at December 31, 2024 and 2023, respectively. This reserve is determined based upon the outstanding volume of unfunded loan commitments at each period end. Any increases or reductions in this reserve are recognized in provision for credit losses.

Previous wording

A provision of $2.8 million and $5.4 million were recorded during the twelve-month periods ended December 31, 2023 and 2022, respectively. The $2.8 million provision for credit losses recognized in 2023 was primarily associated with provisioning for individually analyzed loans. The $5.4 million provision for credit losses recognized in 2022 was associated with growth in the loan portfolio and a deterioration of forecasted economic conditions, offset by a reduction in reserves on individually analyzed loans and unfunded commitments.

Current wording

Provision for credit losses of $36.1 million and $2.8 million were recorded during the twelve-month periods ended December 31, 2024 and 2023, respectively. The $36.1 million provision for credit losses recognized in 2024 was related to additional provisioning for the pooled multifamily, C&I, and criticized loan portfolios. The $2.8 million provision for credit losses recognized in 2023 was associated with provisioning for individually analyzed loans.

Previous wording

The entire carrying amount of each security at December 31, 2023 is reflected in the above table in the maturity period that includes the final security payment date and, accordingly, no effect has been given to periodic repayments or possible prepayments. The weighted average duration of our securities held-to-maturity approximated 5.7 years as of December 31, 2023 when giving consideration to anticipated repayments or possible prepayments, which is significantly less than their weighted average maturity.

Current wording

The entire carrying amount of each security at December 31, 2024 is reflected in the above table in the maturity period that includes the final security payment date and, accordingly, no effect has been given to periodic repayments or possible prepayments. The weighted average duration of our securities held-to-maturity approximated 5.1 years as of December 31, 2024 when giving consideration to anticipated repayments or possible prepayments, which is significantly less than their weighted average maturity.

Previous wording

The following table presents the weighted average contractual maturity of our securities held-to-maturity:

Current wording

The following table presents the weighted average contractual maturity of our securities held-to-maturity at the date indicated below:

Previous wording

The weighted average maturity of our CDs at December 31, 2023 was 5.1 months, compared to 7.6 months at December 31, 2022.

Current wording

The weighted average maturity of our CDs at December 31, 2024 was 5.8 months, compared to 5.1 months at December 31, 2023.

Previous wording

Non-insured deposits (excluding collateralized deposits and deposits with pass through insurance) represented 28.9% and 31.0% of total deposits as of December 31, 2023 and 2022, respectively. The Bank had $1.88 billion and $1.90 billion of public funds collateralized by securities and Municipal Letters of Credit (“MULOC”), and $680.8 million and $615.6 million of deposits with pass through insurance as of December 31, 2023, and 2022, respectively.

Current wording

Non-insured deposits (excluding collateralized deposits and deposits with pass through insurance) represented 31.2% and 28.9% of total deposits as of December 31, 2024 and 2023, respectively. The Bank had $1.89 billion and $1.88 billion of public funds collateralized by securities and Municipal Letters of Credit (“MULOC”), and $1.55 billion and $680.8 million of deposits with pass through insurance as of December 31, 2024, and 2023, respectively.

Previous wording

As of December 31, 2023, the portion of uninsured time deposits in excess of the $250,000 FDIC insurance limit was $115.3 million.

Current wording

As of December 31, 2024, the portion of uninsured time deposits in excess of the $250,000 FDIC insurance limit was $93.3 million.

Previous wording

Our Board of Directors authorized the Bank to accept brokered deposits up to an aggregate limit of 10.0% of total assets. At December 31, 2023, brokered deposits totaled $898.7 million, which included purchased CDs from the CDARS program, purchased MMAs from the ICS program and purchased CDs through a broker. At December 31, 2022, brokered deposits totaled $538.9 million, which included purchased CDs from the CDARS program, purchased MMAs from the ICS program and purchased CDs through a broker. At December 31, 2021, brokered deposits totaled $200.0 million, which included purchased MMAs from the ICS program.

Current wording

Our Board of Directors authorized the Bank to accept brokered deposits up to an aggregate limit of 10.0% of total assets. Brokered deposits totaled $422.8 million and $898.7 million at December 31, 2024 and 2023, respectively. Core deposit growth was used to reduce the brokered deposit position over the course of 2024.